3 Ways to Take Control of Your Shipping Costs without Changing Your Current Process

January 2016

Understand Your Cost Breakdown

Before you can save money on shipping, you must first understand how and why you are spending. A quick way to recognize cost drivers as areas for improvement is with one simple formula:

(TLRs) – (DISCOUNT) + (FEES) = SHIPPING SPEND

TLRs: Transportation List Rates. These are the shipping costs listed on your carrier’s website. TLRs are standard and non-negotiable, which is why your discount is so important for saving money on shipping. It’s worth your while to compare the TLRs of a few different carriers.

DISCOUNT: Most shipping carriers offer discounted rates for eligible businesses that enroll in their savings program. Usually, different discounts are applied for different services. For example, Priority Overnight shipments may have a larger discount than Ground. For eligibility requirements and standard discount rates, check your carrier’s website. Companies with high shipping volumes (as determined by the carrier) may be eligible for deeper discounts.

FEES: A combination of surcharges and add-ons, additional fees make up a very large portion (on average 30 – 40%) of a business’ overall shipping spend.

By understanding how and why you are spending, you are better equipped to negotiate your shipping agreement and save money in the long run. It’s a good idea to enlist the help of an expert when reviewing your contract to find ways to save. You may choose to turn to your rep for this discussion, but remember that your rep’s first priority is to make the carrier money. One suggestion is to find a shipping auditor that works off of contingency. That way, they only make money after they save you money first. Both of your interests are aligned and you walk away with greater discounts and fewer fees.

Catch Errors in Your Invoices

Reading carrier invoices is not a simple task for the untrained eye. And here’s a little secret… they are confusing on purpose. That’s because invoice mistakes are common, and if they were easy to spot, businesses would be more inclined to ask for refunds. But luckily for you, we’ve got some tips that can help.

Learn to recognize surcharges. Since surcharges make up on average 30% - 40% of a business’ total shipping spend, it is important to validate their accuracy. 71lbs’ data shows that around 10% of surcharges are incorrect on most invoices. With over 100 different surcharges we don’t suggest that you try to memorize them, but recognizing the most common ones can save you money down the road.

Audits have become critically important since errors are present in virtually every invoice. The good news is you don’t have to inspect your invoices each month. Sign up with a shipping auditor that has automated the process of reviewing invoices and will file claims for refunds on your behalf. And be sure to choose an auditor that works off of contingency. They do the work for you and you only pay them a portion of the refunds recovered. That seems fair right?

Take Advantage of the Money-Back Guarantee (MBG)

Saving money on shipping doesn’t get much simpler than the money-back guarantee. FedEx, UPS and DHL have a money-back guarantee policy on late deliveries. The MBG makes the shipper eligible for a full refund on overnight, ground or international shipments that get delivered late. All claims must be filed within 15 days of the delivery.

MBG for Overnight Service: Overnight service is time definite. This means that the carrier promises to deliver your package by a certain time the next day. If the shipment is delivered late by 60 seconds or more, a full refund is due.

MBG for Ground and International Services: Ground and International services are day definite. This means that the carrier promises to deliver your shipment by a certain day. If the shipment arrives at least 1 day late, a full refund is due.

Filing a MBG Claim: Claims must be filed within 15 days of a shipment being delivered late. The process for identifying late deliveries and then filing a claim is time consuming, sometimes requires additional documentation and can result in disputes with the carrier.

The easiest and most accurate way to collect refunds is by working with a shipping auditor. And as if the first two times weren’t enough, we’ll say it again - find an auditor that works off of contingency. They do the work for you and you only pay them a portion of the refunds recovered.

To get started saving today, sign up for 71lbs Automated FedEx and UPS Refunds at www.71lbs.com/eagle.